GlaxoSmithKline PLC (LON:GSK) saw its shares drift lower on Friday after Morgan Stanley reinitiated coverage of the UK drugmaker with an ‘underweight’ stance.
The US investment bank set a price target of 1,460p on the FTSE 100-listed firm, with the shares trading at 1,476.20p late morning, down 0.4% on Thursday’s closing price.
READ: Barclays downgrades GSK; warns of “significant EPS dilution” from Tesaro acquisition
Morgan Stanley’s analysts cited concerns over Glaxo’s sector risk-return profile, innovation challenges, HIV pressures and sterling volatility risk.
The bank also reinitiated coverage on blue-chip peer AstraZeneca PLC (LON:AZN) with an ‘equal-weight’ rating and 6,400p price target as its sees some potential upside catalysts, with its shares trading at 6,135p, up 0.5% on yesterday’s close.
The re-initiations came in a cautious Morgan Stanley note on the European biopharmaceuticals sector.
Overall the bank’s analysts said they “expect innovation and pricing pressure initiatives will evolve hand in glove, placing an increasing onus on biopharma players to develop technology platforms and new treatments that carry high innovation risk but, equally, that lower commercial execution risk.”
The analysts concluded: “We think companies behind the curve will need to pay up in order to import innovation or pin their hopes on investors remaining patient through the US political risk cycle.”